Books

In the last few days Bluescope Steel (formerly BHP) has confirmed it will spend US$700m (AU$1b) to expand it’s North Star steel mill in Ohio. So there are multiple headlines. But back in February CEO Mark Vassella explained exactly why they were thinking of it, and his first reason was “energy prices”. Last week, high energy prices were even “a tragedy” for Australian manufacturing. This week however, he’s clarified his position by muddying it up. Now there other reasons and the solution is to fix our gas prices. He’s backpedaling and tossing quotes that happen to help the renewables industry.

Perhaps he’s been heavied by his PR and strategy team? Now he’s saying that energy costs matter, but labor costs do too and “we weren’t ever going to put another steel mill in Australia”. He’s even saying energy costs “did not play a role” — the complete opposite. These will become the quotes the renewable energy fans rely on. Apparently, now what he really wants is cheaper gas — which requires a socialist government-driven solution to fix gas prices, and it’s safe for anyone to mention anything that requires [...]

Wind and solar power are the intermittent freeloaders on the electricity grid. They are treated as if they’re generators, adding power to the grid, but instead they provide something the grid doesn’t need — power that can’t be guaranteed.

Random gigawatts has the illusion of looking useful, but it’s the gift of a spare holiday house you don’t know if you can use til the day before. It’s the spare fridge in the garage that overheats in hot weather, the extra turkey for thanksgiving that might not arrive til the day after. The bills, the storage, the clutter, the chaos.

As I keep saying in RenewablesWorld fuel bills go down, but the land-maintenance-staff-insurance-FCAS-storage-and-capital costs all go up.

RenewablesWorld is a place where a lot more people and machines sit around and watch cat videos on youtube.

Here’s a great plan by Terry McCrann.

The one rule that would expose wind power’s true cost

Terry McCrann, The Australian, Business Review

If you wish to sell power into the grid, the NEM or National Energy Market, you will have to guarantee a minimum level of supply and guarantee that minimum level of supply 24/7.

A big new study by electricity grid nerds (and I mean that in the nicest possible way) shows that after all the money and pain of 20 years of forced transition Australia’s electricity has shifted from 85% coal powered to 75% coal powered, which cost billions and as a bonus, made electricity more expensive and unstable. We drove out some brown coal, but swapped it for black coal. Instead of ousting coal power, the extra solar and wind power replaced some gas and hydro.

The authors are genuine independent experts, and the report is incredibly detailed — so this is rare — but still suffers from serious drawbacks:

The team doesn’t question the need for an artificial expensive transition. Almost all the problems they describe are caused by government policies that task our grid with changing the climate as well as producing cheap and reliable electricity. In a grid being ruined by inept policy, the implied solutions almost all involve more regulation and government policy. If our gas prices are too high we could ban sales overseas, but then we lose the export income. The left hand steals from the right. The free market solution is to use another fuel, [...]

A major new “nail in coffin” study shows the more renewables we force onto the market the more expensive electricity gets.

Everyday someone tells us renewables are cheap, but these estimates come from flawed “LCOE” method (at best) supposedly the lifetime cost, but without many indirect costs. Granted, it’s hard to figure out what the bill for renewable energy is. But what really matters to every man and his dog, is the cost effect on the whole system, not a cherry-slice comparison of a few sunny-windy hours a day which doesn’t take into account the effect that renewable energy has on the rest of the 24/7 electricity grid.

Greenstone, McDowell and Nath have analysed all 29 states in the US where there are laws demanding a certain percentage of energy be renewable. On average a 4% increase in renewables led to a price rise of 17% and the impost was wildly high compared to any remotely sensible cost-benefit analysis. Renewables are the car insurance bill that costs 3 times as much as your car. Any serious environmentalist would hate renewables.

Michael Shellenberger, Forbes

The cost to consumers has been staggeringly high: ”All in all, seven years after passage, [...]

Some of the nation’s biggest energy companies have allegedly used the closure of Australia’s dirtiest coal-fired power station to price gouge customers and make an extra $3 billion in wholesale profits, according to a new report.

We already knew that renewables are so poisonous they make other generators more expensive. But this is something “extra”. Either big corporate’s suddenly turned into greedy machines or the government destroyed the free market that worked fine for years:

When the closure of Hazelwood was announced just a few months earlier, AGL increased the price of much of the coal-fired power on offer from the Bayswater and Liddell plants in NSW.

The study found a significant part of the output from the Liddell plant was repriced from $40 to $60 per megawatt hour, to greater than $5,000 per megawatt hour — so expensive it effectively restricted supply.

At the same time, much of the power offered by the Bayswater plant almost doubled in price, from about $40 [...]

As Australia push-pumps “renewables” into remote locations some of their incomes are suddenly being cut because the losses (as they transmit across long lines) are higher than they expected. On March 8th the AEMO rerated many generators and this year it’s being called a bloodbath for wind and solar. Some of them, like AGL’s Silverton wind farm face losses of 20%.

It all revolves around something called Marginal Loss Factors, a value that is set by the AEMO each year for each generator. The rating is reduced by transmission losses over distance and also by “congestion” from other renewables which are popping up in the same remote locations far from the cities and industries that need the electricity they make. This sudden loss of expected income threatens new wind and solar projects (as it should — hello market signal!) Sometimes the loss factors are hard to predict years in advance which makes it difficult to also predict whether a project will return a profit (even despite the guaranteed subsidies).

Another renewable inefficiency strikes — “marginal loss factors”

Generators are paid according to the electricity that arrives rather than what they produce at the plant. (Seems fair). This is called the Marginal [...]

There were no headlines but $300 million dollars was burned at the stake of renewables

Just another day on the exciting Australian NEM.

Friday week ago we had another price spike hitting the $14,500 mandated price cap. On that day South Australians and Victorians paid a blistering $61 million and $210 million respectively. That’s the cost of a single day’s electricity on what was a hot day (but not a record) for Melbourne (38C) and Adelaide (42C). These are temperatures that those cities often reach in summer. It was about 28C in the other three capital cities. Don’t be fooled — high temperatures are not the reason for the price spikes — as it happens, NSW used 22% more electricity than Victoria that day yet paid 90% less.

Thanks to David Bidstrup for calculating these numbers (MSWord file).

…

But even NSW and Queensland are pay millions too much

You might think NSW and Queensland have reasonable prices for electricity, but lest we forget, what they pay today is still three times more expensive than they would have been if they were paying 2012 prices. Long ago in the renewable dark ages the average price of wholesale electricity was [...]

As I said for free and two months before the ANU, with a 50% annual growth in renewables, Australia is ramping up unreliable power faster than anywhere.

Now comes a paper: Australia: the renewable energy superstar showing that, per capita, Australia is installing unreliable generators in a blitzkrieg pace, more than twice as fast as Germany is, and 4-5 times faster per capita than the EU, USA, Japan and China. No other dummies are even in the race. The largest coal exporter in the world is working harder than anyone to destroy its largest export earner — which would be noble if only there was more to it than being a magical spell to ward off storms.

This is a legendary paper and very helpful. Save the link, copy the reference, send it to your MP, your friends, your newspaper! Why not head to the launch at ANU at 5:30pm, 14th Feb?

Never again can anyone get away with national flagellation for “not doing enough”. Henceforth Green and Labor M.P.’s will stop calling us a national joke, a pariah, and a disgrace. (Though, actually, all those things are true, for the opposite [...]

The cost of electricity on Thursday in two states of Australia reached a tally of $932 million dollars for a single day of electricity. Thanks to David Bidstrup on Catallaxy for calculating it.

As Bruce of Newcastle says “ “Three days and you could buy a HELE plant with the money wasted.” That’s a power plant that could last 70 years, and provide electricity at under $50/MW. (Forget all the high charges for 30 years to pay of the capital (in red below), we could just buy the damn thing outright, paid off in full from day one.)

Cost of old coal plants in the USA. From the report by Stacy and Taylor, of the Institute for Energy Research (IER)

Burned at the stake: $500 per family

In Victoria, per capita, that means it cost $110 for one day’s electricity. For South Australians, Thursday’s electricity bill was $140 per person. (So each household of four just effectively lost $565.) In both these states those charges will presumably be paid in future price rises, shared unevenly between subsidized solar users and suffering non-solar hostages. The costs will be buried such that duped householders will not be aware [...]

Prices are “off the chart” in Vic and SA right now and likely for the next few hours. Factories will be closing. Diesel generators will be running, but only in South Australia and Victoria. At these kinds of prices tens of millions of dollars could be going up in smoke every hour. By the end of today the bill could come to more than a hundred million dollars.

In QLD and NSW where there are old or evil coal fired plants the wholesale electricity costs are only $105/MWh.

Victoria

…

South Australia

…

The national electricity market (or at least the Eastern half and 90% of the population).

…

Today when we need it, wind power on the NEM is running at about 20% of total capacity. Four out of five windfarms are not working.

…

UPDATE: LOR3 (highest level warning) issued in Victoria but resolved at 8pm. In SA the diesel jet engines have been switched on for the first time as emergency reserve. We didn’t used to need to buy expensive machinery so it could sit around for 18 months before it was needed.

These are hot, but not unusual days for the capitals — Adelaide is forecast to be 41C, the other capitals are tame: Melbourne 33, Canberra 39 and Sydney 30. Though small inland cities are baking – like Albury at 44C.

South Australia could burn $36 million an hour

For South Australia tomorrow the AEMO is forecasting the state will need 2,800MW for 2.5 hours at $12,000/MWh. That could be $35m per hour. Note that forecasts in electricity often vary quite a lot from actuals. Looking at the truckload of cash being offered (from a generators point of view) will presumably bring in some extra supply and lower that price.

Forecast prices for Jan 15th 2019 | AEMO

For Victoria, things are even worse

The AEMO is forecasting 9,000MW will be needed at $14,500/MWh for 3 hours. That’s $130 million per hour. Hypothetically, it would be an obscene $390 million dollars just to power the state just from 3 – 6pm. Enough to buy an entire gas fired power plant and have it sitting around [...]

The Vales Point Coal plant (Part B) was built in 1978. It was sold for $1 million in 2015 by the NSW government. It’s now making a bumper profit. If it gets a $750 million renovation it could keep running til 2049 when it will be 70 years old. Vales has a nameplate capacity of 1,320 MW.

On the other hand, we could follow South Australia and spend $650m and get a 150MW solar plant that only works half the time.*

When is an old coal plant on death’s door a better bet than the worlds largest solar plant? — Every hour of every day. Plus you get free fertilizer.

Profits to keep Vales Point coal-fired power station going for another 20 years

John Stensholt and Perry Williams, The Australian

The Vales Point power station near Lake Macquarie, which supplies about 4 per cent of power for the national grid, could receive a $750m injection to ensure it runs until 2049, making it the nation’s last standing coal station, with the country’s other facilities due to [...]

Finally some veteran engineers checked the Labor Party 50% renewable plan and the AEMO “65% scenarios”. Unlike others, their study that did not involve magical assumptions that the cost of renewables would dramatically fall. Instead they used “actual costs” and found the price of electricity will rise “84%” and cheap coal power will be forced out of business (just like what we also found here). The engineers include Barry Murphy, former managing director and chairman of Caltex. Robert Barr, an electrical engineer and academic at University of Wollongong. If only Kevin Rudd had asked them in 2007.

Engineers warn of bill shock under green energy surge

Adam Creighton, Economics Editor, The Australian

Electricity bills will soar and gas and coal-fired power stations will close if the share of wind and solar generation increases dramat­ically, engineers have warned after analysing the nation’s ­energy supply.

It found bills were likely to soar 84 per cent, or about $1400 a year, for the typical household, if wind and solar power supplied 55 per cent of the national electricity market.

IPA estimates Paris Agreement to stop storms and hold back the tide may cost $8500 per Australian family

What a deal. You could have free electricity for the next four years or an imperceptible difference in the air outside the nursing home for your children’s 94th birthday.

The Americans went for the money. So did nearly everyone else.

Damian Wild at the IPA calculates that the Paris Agreement will cost patsy Australians $52 billion dollars in the next 12 years.

Paris deal spells ‘irreparable damage’: IPA report

Rachel Baxendale, The Australian

A study by the Institute of Public ­Affairs, “Why Australia must exit the Paris Climate Agreement”, estimates our Paris target of reducing emissions to 26-28 per cent on 2005 levels by 2030 will impose a $52 billion economic cost between now and 2030, equating to $8566 a family.